Scenario
George Lassiter, a project engineer of a major defense contractor had a profitable business of designing T-shirts for the concerts. He envisioned that the upcoming show would be the great opportunity to get more customers in the business leading to profit. He was sure that 20,000 tickets for the standing area around the stage would surely be sold. Regardless, this were two critical inquiries which are the amount of people heading off to the concert; the percentage of attendees who would buy the T-shirt. Lassiter has anticipated that the potential outcomes particularly 80,000, 50,000 and 20,000 grand seats were the high medium and the low. The probability of 50,000 was as likely as both of the two outcomes combined. As, such the probability of other two alternative was almost equal, though 80,000 was more probable than 20,000. He likewise foresees that …show more content…
1. To maximize aggregate possible profit.
2. To minimize the risk and uncertainty based on the major unknowns.
Decision Problem:
Which order size is the best for the upcoming concert?
Analysis
The comparative study of cost and revenue depicts that because of the inventory cost of the expected excess amount of product profit in the first two orders is substantially low in comparison to the third order size. In the third order size the probability of selling the product is significantly higher as the probability of number of participants to buy the shirts is 10% more likely. This reflects that George Lassiter can maximize this profit by choosing the third small order size with less risk.
Decision Tree
Conclusion: Among these three options, the order size 7,500 is one that can be the ideal different option to be taken into consideration. This option has the more expected money related quality than different options. Henceforth, it is the best option among
George Lassiter, a project engineer of a major defense contractor had a profitable business of designing T-shirts for the concerts. He envisioned that the upcoming show would be the great opportunity to get more customers in the business leading to profit. He was sure that 20,000 tickets for the standing area around the stage would surely be sold. Regardless, this were two critical inquiries which are the amount of people heading off to the concert; the percentage of attendees who would buy the T-shirt. Lassiter has anticipated that the potential outcomes particularly 80,000, 50,000 and 20,000 grand seats were the high medium and the low. The probability of 50,000 was as likely as both of the two outcomes combined. As, such the probability of other two alternative was almost equal, though 80,000 was more probable than 20,000. He likewise foresees that …show more content…
1. To maximize aggregate possible profit.
2. To minimize the risk and uncertainty based on the major unknowns.
Decision Problem:
Which order size is the best for the upcoming concert?
Analysis
The comparative study of cost and revenue depicts that because of the inventory cost of the expected excess amount of product profit in the first two orders is substantially low in comparison to the third order size. In the third order size the probability of selling the product is significantly higher as the probability of number of participants to buy the shirts is 10% more likely. This reflects that George Lassiter can maximize this profit by choosing the third small order size with less risk.
Decision Tree
Conclusion: Among these three options, the order size 7,500 is one that can be the ideal different option to be taken into consideration. This option has the more expected money related quality than different options. Henceforth, it is the best option among